Online travel agency Expedia (NASDAQ: EXPE) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 3.4% year on year to $2.99 billion. Its non-GAAP profit of $0.40 per share was 11.5% above analysts’ consensus estimates.
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Expedia (EXPE) Q1 CY2025 Highlights:
- Revenue: $2.99 billion vs analyst estimates of $3.01 billion (3.4% year-on-year growth, 0.8% miss)
- Adjusted EPS: $0.40 vs analyst estimates of $0.36 (11.5% beat)
- Adjusted EBITDA: $296 million vs analyst estimates of $269.7 million (9.9% margin, 9.7% beat)
- Operating Margin: -2.3%, up from -3.8% in the same quarter last year
- Free Cash Flow Margin: 92.2%, up from 0.2% in the previous quarter
- Room Nights Booked: 107.7 million, up 6.5 million year on year
- Market Capitalization: $21.25 billion
Company Overview
Originally founded as a part of Microsoft, Expedia (NASDAQ: EXPE) is one of the world’s leading online travel agencies.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Expedia grew its sales at a decent 12.8% compounded annual growth rate. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Expedia’s revenue grew by 3.4% year on year to $2.99 billion, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Room Nights Booked
Booking Growth
As an online travel company, Expedia generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.
Over the last two years, Expedia’s room nights booked, a key performance metric for the company, increased by 9% annually to 107.7 million in the latest quarter. This growth rate is decent for a consumer internet business and indicates people enjoy using its offerings. 
In Q1, Expedia added 6.5 million room nights booked, leading to 6.4% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating booking growth just yet.
Revenue Per Booking
Average revenue per booking (ARPB) is a critical metric to track because it not only measures how much users book on its platform but also the commission that Expedia can charge.
Expedia’s ARPB fell over the last two years, averaging 1.8% annual declines. This isn’t great, but the increase in room nights booked is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Expedia tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether bookings can continue growing at the current pace. 
This quarter, Expedia’s ARPB clocked in at $27.74. It declined 2.8% year on year, worse than the change in its room nights booked.
Key Takeaways from Expedia’s Q1 Results
We were impressed by how significantly Expedia blew past analysts’ EPS and EBITDA expectations this quarter. On the other hand, its number of room nights booked slightly missed, causing its revenue to also fall a bit short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 5% to $160.75 immediately following the results.
Expedia didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
